Iran’s Military Reshuffle Sends a Hardline Signal, Heightening Oil Market Risks as the Strait of Hormuz Crisis Deepens

Daily News

Summary:

Mojtaba reshuffles Iran’s military leadership as Tehran prepares for a prolonged regional conflict; the IEA says the Strait of Hormuz remains difficult to reopen...

【Highlights】

1. Iranian President holds seven- to eight-hour meeting with Supreme Leader

2. Iran’s Supreme Leader announces multiple appointments, reshuffling the military leadership

3. U.S. gasoline and diesel prices hit record highs for this time of year during the peak travel season

4. Mojtaba reshuffles Iran’s military as Tehran prepares for a prolonged regional conflict

5. U.S. inflation rises moderately in July while core price pressures remain contained, reducing the probability of a September Fed rate hike

6. U.S. budget deficit surges in July to its highest level since March 2021

7. IEA says the Strait of Hormuz remains difficult to reopen, with the oil market deficit expected to deepen this year

【Details】

Iranian President Holds Seven- to Eight-Hour Meeting with Supreme Leader

Iranian President Masoud Pezeshkian said on August 10 that he had recently held a meeting with Iran’s Supreme Leader Mojtaba Khamenei, which lasted seven to eight hours, adding that Mojtaba was in good health. According to Iranian state media on August 9, Mojtaba met with Pezeshkian to discuss in depth the challenges currently facing Iran, including people’s basic needs, the ongoing war against Iran, the country’s future prospects, military developments, and economic cooperation with foreign partners.

Iran’s Supreme Leader Announces Multiple Appointments, Reshuffling the Military Leadership

On August 10 local time, Iran’s Supreme Leader Mojtaba Khamenei announced six new appointments within the Iranian armed forces. Among them, Major General Ali Abdollahi was appointed Chief of Staff of the Iranian Armed Forces, while Brigadier General Ahmad Vahidi was promoted to Major General and appointed Commander-in-Chief of the Islamic Revolutionary Guard Corps (IRGC). In addition, Brigadier General Kioumars Heidari was appointed Deputy Chief of Staff of the Armed Forces, Major General Mostafa Izadi was appointed Deputy Commander-in-Chief of the IRGC, Brigadier General Ali Azmaei was appointed Commander of the IRGC Navy, and Hossein Taeb was appointed head of the Basij paramilitary organization.

U.S. Gasoline and Diesel Prices Hit Record Highs for This Time of Year During Peak Travel Season

As the U.S. enters the peak summer driving season, gasoline and diesel prices have climbed to their highest levels on record for this time of year. According to the American Automobile Association (AAA), both gasoline and diesel prices have reached record seasonal highs. In the second week of August, the average U.S. gasoline price reached $4.00 per gallon, while diesel rose to $5.40 per gallon, both record highs for this time of year. The period coincides with the peak travel season, when millions of Americans typically drive for vacations or family visits. During the same period last year, gasoline averaged $3.20 per gallon and diesel $3.70 per gallon.

Mojtaba Reshuffles Iran’s Military as Tehran Prepares for a Prolonged Regional Conflict

As negotiations with the United States remain deadlocked, Iran’s Supreme Leader Mojtaba has announced a military reshuffle, signaling that Tehran is preparing for a prolonged regional conflict and adopting a tougher stance. Mojtaba has reorganized Iran’s military leadership and appointed six new senior officials, including Ahmad Vahidi as Commander-in-Chief of the IRGC, Ali Abdollahi as Chief of Staff of the Armed Forces, and Rezaei as Secretary of Iran’s Supreme National Security Council.

Vahidi said in an earlier interview with Iranian state television that Mojtaba’s recent appointments to senior military positions marked a shift toward a more offensive strategy. He said that, whenever conditions are favorable and orders are issued, Iran’s military must be capable of extending operations into enemy territory, marking a departure from the prewar strategy, which was primarily focused on defense and protecting the country.

The number of vessels transiting the Strait of Hormuz has fallen to its lowest level in a week, with only eight vessels passing through the critical waterway on Tuesday, compared with 130 to 140 vessels per day before the war.

U.S. July Inflation Rises Moderately While Core Pressures Remain Contained, Reducing the Probability of a September Fed Rate Hike

U.S. consumer prices barely increased in July as gasoline prices fell for a second consecutive month, while underlying inflationary pressures remained moderate, further reducing the likelihood of a Fed rate hike next month. The U.S. Consumer Price Index (CPI) rose 0.1% month-on-month in July, compared with a 0.4% decline in June, and increased 3.4% year-on-year, down from 3.5% in June. Core CPI rose 0.2% month-on-month in July, following no change in June, and increased 2.5% year-on-year, down from 2.6% in June. However, economists noted that inflation remains well above the Federal Reserve’s 2% target, meaning the possibility of another rate hike later this year has not been completely ruled out.

U.S. Budget Deficit Surges in July to Highest Level Since March 2021

The U.S. Treasury Department reported Wednesday that the U.S. budget deficit surged to its highest monthly level in more than five years, as soaring Medicare spending and interest payments on federal debt continued to weigh on the nation’s fiscal position. In addition to the sharp monthly increase, the U.S. government’s cumulative deficit for the first 10 months of fiscal year 2026 has approached $1.8 trillion. With two months remaining in the fiscal year, the deficit has already surpassed the full-year total recorded in fiscal 2025.

The July deficit totaled $432.3 billion, up about 48% from the same month last year, marking the largest monthly deficit since March 2021 and the largest deficit ever recorded for July. Medicare spending totaled $174 billion during the month, up from $103 billion in June, bringing the year-to-date total to $955 billion. It was the largest single expenditure in July, well above Social Security spending of $141 billion and net interest payments on Treasury debt of $104 billion. Tariff refunds also had a $33 billion impact on the budget. In addition, because the first day of the month fell on a non-business day, U.S. government revenue was reduced by a calendar-related effect of $99 billion.

For years, Trump has urged the Federal Reserve to cut interest rates to reduce the cost of servicing the national debt. Since Waller, his nominee, took over as Fed chair in May, he has stopped criticizing the Federal Reserve.

IEA Says Strait of Hormuz Remains Difficult to Reopen, With Oil Market Deficit Expected to Deepen This Year

The International Energy Agency (IEA) said global crude oil supply is expected to decline by 4.3 million barrels per day this year, or about 4%, as renewed conflict in the Middle East disrupts crude supplies and further widens the global oil market deficit. In its monthly report, the IEA said global oil supplies have fallen well below demand due to the closure of the Strait of Hormuz, the U.S. blockade of Iranian oil exports, attacks in the Bab el-Mandeb Strait, and reduced exports of Kazakhstan’s CPC Blend crude.

The IEA also expects global oil demand to decline by 1.6 million barrels per day this year, a larger reduction than its previous forecast of about 1 million barrels per day.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) lowered its forecast for global oil demand growth in 2026 to 580,000 barrels per day in its monthly report, marking the fourth consecutive downward revision to its demand growth forecast. The organization also raised its forecast for global oil demand growth in 2027.

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